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Post Info TOPIC: CIS Tax
Amanda


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CIS Tax
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Hi Everyone,

I have a question about CIS tax, my guy sometimes does work for other contractors and sends them an invoice -20% CIS which the other contractor pays for pays the CIS to the HMRC.

Do I put the invoice on ie labour -20%, but put this down as a nett amount or do I need to show the 20% tax on the invoice, and then the client pays him raise a credit note on Quickbooks to account for the 20% deduction.

Know how to do it the other way round IE purchases, ie if a subby works for him he then pays the CIS TAx on his behalf.  I have got that entered in to QB OK.

LAstly, when paying CIS bill normally monthly, how do I account for it on Quickbooks ie is a CRedit from BANK and DEBIT CIS account.  I have a CIS account set up s a liability account in the chat of accounts (or if you are sage it is ste up as a nominal code).

Hope that all makes sense, any help will be appreciated.

cheers

A x

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Amanda
Wendy


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Hi Amanda

I don't use Quickbooks, but on Sage the process is as follows (assuming it would be similar for QB):

Post Gross Sales Invoice:  
E.g. 
£1,000 to Debtors Account in B/S
£1,000 to Sales Account in P/LThe CIS calculation would be as follows:

If net sales of £1000
CIS tax deducted = 20% x £1000 = £200

Post the Sales Receipt:
E.g.  
£1000 minus CIS deduction of £200 = £800
£800 Debit Bank Account in B/S
£800 Credit Debtors Account in B/S

For the CIS amount of the invoice, i.e. £200, you need to credit the debtors account and debit an account set up for CIS tax. If you use QB you could set up a new bank account solely for the CIS tax.

By doing the above you will clear down the gross debtor in the sales ledger, and have a debit balance sitting in an account to represent the CIS deducted to date.

Hope this makes sense?


Wendy



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